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20VC Exclusive: Keith Rabois on Rejoining Khosla Ventures
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Risk and Price of Seed Funding
Seed funding involves significant risk and often not commensurate pay for the risk taken. The range for seed funding can vary from around eight million to 20 million, which is considered lower now. Investing in deals like five million on a 25 million valuation requires extraordinary reasons as it is like playing a high-stakes poker game, with each funding round being a card dealt at a different price point. The decision to invest at such a high price point needs a clear understanding of the informational content and the reason behind it. The founder's rationale for the valuation is crucial, as giving a term sheet at a lower valuation may not allow the company to achieve necessary milestones.
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